ANALYSIS: For an institution that cost the State €5.4bn, a gift of €21,150 and €1m bonus were excessive
ANGLO IRISH Bank has inherited not just the remnants of the Irish Nationwide business but also the various “legacy issues” that were under investigation at the building society before the merger of the State’s two worst financial institutions at the start of last month.
Mike Aynsley, the chief executive of Anglo, has taken on the thorny issue of trying to recover the €1 million bonus (about €600,000 after tax) from Irish Nationwide’s former chief executive, Michael Fingleton.
One month after taking charge of Irish Nationwide, Aynsley has made a very public statement by asking that Fingleton not just repay the bonus as he had promised, but to return a €11,500 watch he received as a retirement gift.
The previously undisclosed gift was presented to Fingleton on his retirement after 37 years with the building society in April 2009.
The irony is that the gift was given to Fingleton after he was forced out of the job under political pressure over his receipt of a €1 million bonus in November 2008, two months after the introduction of the State bank guarantee.
The watch cost the building society €21,150, as Irish Nationwide covered the tax that he would otherwise have been forced to pay on his receipt of the gift.
It was not immediately clear last night who signed off on the purchase of such an expensive watch, or whether the two Government-appointed directors on Irish Nationwide’s board were aware of it.
Regardless, it now seems excessive for an institution that has since cost the State €5.4 billion.
Most of the post-Fingleton Irish Nationwide board has departed following the merger with Anglo.
Fingleton’s replacement, chief executive Gerry McGinn, along with chief financial officer John McGloughlin and director Roger McGreal, remain on, but all three were appointed after June 2009.
Aynsley said the issue of Fingleton’s bonus now falls under Anglo, which is to be renamed Irish Bank Resolution Corporation (IBRC).
“The INBS board felt that they went as far as they could. It’s up to IBRC to continue to pursue it,” he said.
Aynsley accepts that Fingleton was legally entitled to the bonus but wants him “to do the right thing” and repay it at a difficult time for the country.
“It’s really somebody doing the wrong thing by the country,” he said.
Aynsley has appealed to Fingleton to repay the bonus on the basis that it was inappropriate as it was paid at a time when Irish Nationwide was only surviving as a result of the 2008 State guarantee.
“We are going to pursue him to honour his commitment to repay it,” he said.
Fingleton has claimed that the last government reneged on a deal under which, in March 2009, he agreed to repay it if there was no further issues raised about the bonus or his €27 million pension.
Former minister for finance Brian Lenihan told former Irish Nationwide chairman Danny Kitchen in a December 2009 letter that no such agreement existed.
In April 2010, a Sunday newspaper, citing a close associate of Fingleton, said it was always his intention to distribute the bonus to Irish charities, which would take place if conditions were met.
“The Irish taxpayer deserves a better result than Mr Fingleton saying that he doesn’t need to pay it back to the bank because he is legally entitled to it or it was given to charity,” said Aynsley.
He declined to say how Anglo might seek to recover the bonus if, as before, he refuses to repay it.
Anglo’s lawyers were examining this and other issues, he said. Like the bonus, it is not obvious whether Anglo has legal grounds to recover Fingleton’s €11,500 watch.
Asked whether the “legacy issues” at Irish Nationwide were worse than at Anglo, Aynsley said: “The legacy situation in both organisations is bad. The INBS board has done an enormous amount to get to the bottom of what’s gone on here.”
